JPMorgan Chase & Co. (NYSE:JPM) is being sued for alleged securities fraud by a Louisiana Police pension fund that resulted in a $2bn net loss for the company.
The largest bank in the United States is being sued on behalf of the employees after JPMorgan announced the unexpected loss in a press conference last month.
A class action suit was filed on Friday against the bank, which is accused of misleading investors between February 2010 to May 2012. The plaintiffs believe they were not aware of the risks being taken after the purchase of common stock in the company. Very specific trading rules were broken, according to a statement released by Grant & Eisenhofer, the law firm handling the case. The firm specializes in securities, corporate governance, antitrust, bankruptcy, and false claims suits.
It is expected that tens of thousands of people will participate in the class action suit, which will seek undisclosed compensatory and punitive damages.
JPMorgan announced on May 10th that it had experienced a $2bn loss as a result of risky trades in the derivatives market on contracts attached to corporate bonds. The loss was announced as $2bn, which is likely to rise as stock prices continue to fall. Since May, the head of the Chief Investment Office, Ina Drew has resigned, leaving the company that has been the center of attention surrounding the Volcker Rule and other regulatory issues.
Jamie Dimon, CEO of the company, announced that he will not provide up-to-date information on the company’s losses, leaving the stockholders in the dark on the extent of the losses until second-quarter reports come out in July. Since the losses were reported in early May, JPMorgan shares are down 20%.